SIRIUS XM Holdings Inc. (SIRI - Analyst Report) is set to release third-quarter 2014 results before the opening bell on Oct 28.

In the last quarter, the company delivered a negative 33.33% surprise. Let’s see how things are shaping up for this announcement.

Factors to Consider 

SIRIUS XM is highly optimistic about its future growth prospects as most of its radio services are available in 26% of the cars plying in the U.S. Recently, the company raised its 2014 subscriber outlook on the back of record-high domestic new vehicle sales in August this year, marking the highest since Jan 2006. Notably, the company holds strong telematics partnerships with almost all major car manufacturers.

On the flip side, SIRIUS XM’s success largely depends on the future of the U.S. auto industry. Therefore, even a minor fluctuation in auto sales may significantly affect the company’s financials. Moreover, stiff competition from other industry players coupled with continuous evolution of technology may pose serious threats to the company’s profits moving ahead. 

Earnings Whispers?

Our proven model does not conclusively show that SIRIUS XM is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or at least 3 for this to happen. Unfortunately, this is not the case here as elaborated below. 

Zacks ESP: The Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is currently pegged at 0.00%, as both these estimates stand at 2 cents.  

Zacks Rank: SIRIUS XM’s Zacks Rank #3 (Hold) when combined with an ESP of 0.00% makes surprise prediction difficult.

We caution against stocks with a Zacks Rank #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies you may want to consider as our model shows these have the right combination of elements to post an earnings beat:

Facebook, Inc. (FB - Analyst Report) with an earnings ESP of +6.25% and a Zacks Rank #2 (Buy).

Liberty Interactive Corporation (QVCA - Analyst Report) with an earnings ESP of +10.00% and a Zacks Rank #3.

DragonWave Inc. (DRWI - Snapshot Report) with an earnings ESP of +16.67% and a Zacks Rank #3.